This may well be the question many investors will need to answer in the coming months.

The launch of tax-free savings accounts on March 1 this year offers a great opportunity for retail investors to access some additional tax savings. The accounts will allow individuals to invest R30 000 a year up to a lifetime maximum of R500 000 in a variety of asset classes. All proceeds on investments in these accounts – dividends, interest and capital gains – will be completely tax-free. (For more detailed information on tax-free savings accounts, you may want to read articles that were previously published on Moneyweb here and here.)

Tax-free savings accounts are part of government’s drive to reform non-retirement savings and are not explicitly intended as a vehicle to save for retirement. The idea is rather that these accounts will prevent South Africans from accessing their retirement savings in the event of a crisis. It is therefore envisioned to be more of a medium-term savings vehicle.

Yet, nothing prevents investors from using these accounts as a vehicle to save for long-term goals like retirement. In fact, some calculations suggest the real benefit of these accounts is only truly unlocked in the long run.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.